MNI BRIEF: German Insolvencies Steady, But Rise Expected - IWH

The number of German firms declaring themselves bankrupt was steady in January 2024, the latest analysis by the Leibniz Institute for Economic Research Halle (IWH) shows, though the number was still around 40% higher year-on-year and 20% above the January average from 2016-2019.

Some 1077 companies went bust last month, affecting around 14,000 jobs at the largest 10% of firms - half the level seen in December, but double the pre-crisis average, with SMEs in industry and trade the worst affected. (see MNI INTERVIEW2: German Employment Gains May Prove Fleeting) Current conditions and the fact that pandemic support was more often paid out to unproductive companies that are now struggling to repay government loans were strong contributory factors, IWH’s Steffen Muller said, with the number of insolvencies expecting to continue rising in the coming months.

The data underlines the difficulties the German economy is facing and again highligjht to ECB policymakers that growth at least in H1 2024 will be sluggish.